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Two-Sided Financial Technology Underadoption: Experimental Evidence from Jordan

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Listed:
  • Bair, Sabrine
  • Miquel-Florensa, Josepa
  • Ozyilmaz, Hakan

Abstract

This study examines the underadoption of digital wallets as network goods through a field experiment conducted in Jordan. We elicit consumers’ and merchants’ willingness-to-pay (WTP) for interoperable mobile wallets using an incentive-compatible mechanism and measure their expectations regarding cross-market adoption. Our findings indicate a low demand for digital wallets across both sides of the market, with consumers and merchants willing to pay approximately 35% and 40% of the market price, respectively. While consumers’ aggregate expectations of merchant adoption are accurate, they exhibit considerable individual heterogeneity. Crucially, consumers’ sensitivity to cross-network effects is limited: a 1 p.p. increase in crossside adoption expectations translates into a 0.013 USD increase in WTP. Meanwhile, merchants significantly underestimate consumer adoption and demonstrate approximately half the sensitivity of consumers to cross-side network effects. These results hold significant implications for designing interventions that exploit network effects in order to increase digital wallet adoption.

Suggested Citation

  • Bair, Sabrine & Miquel-Florensa, Josepa & Ozyilmaz, Hakan, 2024. "Two-Sided Financial Technology Underadoption: Experimental Evidence from Jordan," TSE Working Papers 24-1582, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:129817
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    Keywords

    financial inclusion; network effects; digital wallet; digital financial literacy;
    All these keywords.

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